Double Day

New flagship smartphones are driving user traffic, and wireless operators are rushing to compete with increased data allowances for subscribers. In the US, AT&T, Sprint and Verizon have been jostling for position as the most generous provider of bits and bytes for family plans. Rather than resorting to price wars to reduce churn and entice competitors' subscribers, American operators hope that families' growing hunger for bandwidth will provide them with some stability.

The US — like most developed markets — is experiencing mobile penetration rates of 100%, and most post-paid subscribers are already smartphone users. Advertising a big jump in monthly data allowances is a simple and clear way to score some points with customers.

Operators can gain revenue by charging an access fee for each device on shared plans. AT&T and Verizon charge up to $40 per month per device on their shared plans, which alone is greater than the ARPU in many markets. Larger buckets of data mean that families are more likely to have mobile group hugs, attaching themselves to one operator and one monthly bill. This helps to create stickiness.

The amount of data for your dollar differs widely between the operators. Sprint now offers 60 GB per month for $130, and Verizon offers 30 GB for $130. However, not all bytes are created equal, and Verizon's "can-you-hear-me-now" reputation for network quality provides it with higher margins.

The US market has become very responsive to strategic moves by competitors. On 27 September, AT&T announced that subscribers to their Mobile Share Value plans would get twice the data at the same price. Sprint quickly responded with a similar message on the morning of 1 October, and Verizon issued its double-data press release later in the day. Most subscribers will probably stay put, but they might develop a taste for more mobile bandwidth.

About 70% of American households have Wi-Fi, and some estimates suggest that the average subscriber is close to a Wi-Fi access point 80% of the time. LTE and 3G still act as a complement for most individuals, but it'll be interesting to see how these more generous data plans contribute to the cord-cutting trend among younger households. About 13% of American households led by those under the age of 35 are now completely cordless, and plans that have doubled data from 50GB to 100GB could result in more wireless-only homes. No fixed-line phones, no cable television, and not even naked Internet.

These recent offers of data doubling are likely to cancel each other out, but there will be longer-term effects to the audience. Devices are converging, and a well-connected smartphone means a well-connected household. For some, this might be all they need.